(Bloomberg) – In three days, more than US $ 3.85 billion has been withdrawn from the Thai stock market, with political risks increasing as national elections approach.

The SET index, the country's benchmark index, declined 1.3% over this period. Thai Raksa Chart, the party linked to former exiled leader Thaksin Shinawatra, has tried to make Princess Ubolratana Rajakanya his candidate for the post of prime minister on February 8, while her brother, King Maha Vajiralongkorn, has Was publicly opposed. Activists have asked the electoral commission to dissolve the Thai Raksa Chart for violating the electoral rules.

Uncertainty surrounding the Thai vote will have an impact on equities, said Nader Naeimi, Head of Dynamic Markets at AMP Capital Investors Ltd. in Sydney. Investors are required to take profits after the start of the year on the markets by incorporating "a lot of good news about the Fed, regarding the central bank policy," he explained.

Foreign investors sold $ 71 million net of Thai shares over the past two days, according to data compiled by Bloomberg. On Monday, the SET index fell most sharply for almost a month and shares related to Thaksin also went wild: SC Asset Corp. and Praram 9 Hospital Pcl, two companies controlled by his family, collapsed after last week's rally, while Intouch Holdings Pcl – which Thaksin founded before selling the entity to Temasek Holdings Pte – slid from almost 5%.

For Naeimi, the political upheaval would be a good time to shop because the market correction will not last long.

"Thailand is used to unstable political situations, so I do not think it's a surprise," he said. "From time to time, these things ignite, they have no long-term impact."

The dissolution of Thai Raksa Chart could anger Thaksin's supporters and heighten pressure from junta leader Prayuth Chan-Ocha to stay as prime minister after the March 24 elections. Prayuth led the 2014 coup that ousted Yingluck Shinawatra, Thaksin's sister, and is expected to have the support of the Senate appointed by the military.

A winner after the vote would solve the investors' anxiety, said Jingyi Pan, strategist at IG Asia Pte. In retrospect, the certainty of the leaders accompanying the junta (also known as the military rule) reassured them, she said.

Horse riding

Thai politics has not evolved smoothly in the past, and investors who have money on the market are generally comfortable with the possibility of restless driving. Should investors get out, or take money and run away?

"We remain invested," said Michael Reynal, a fund manager at Sophus Capital. Although recent events are disturbing, he is aware that Thai politics tends to be "irregular", but the stock market has companies with strong growth prospects and attractive valuations.

Investor Ingrid Baker, Portfolio Manager at Invesco Advisers Inc., plans to stay the course. "We tend to overcome these obstacles," she said. "If things get very cheap, then we could add."

Nirgunan Tiruchelvam, an analyst at Exotix Capital, predicts that the consumer sector will be "the big winner" before the vote, while spending on everything from snacks to posters to alcohol will increase.

– With the help of Ben Bartenstein, Abhishek Vishnoi and Aviel Brown.

To contact the reporters on this story: Divya Balji in Singapore at dbalji1@bloomberg.net Natalie Lung in Hong Kong at flung6@bloomberg.net

To contact the editors in charge of this story: Chris Nagi at chrisnagi@bloomberg.net, Cecile Vannucci, Sunil Jagtiani

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